How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask bigduckontax Your Own Question
bigduckontax
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 5613
Experience:  FCCA FCMA CGMA ACIS
75394688
Type Your Tax Question Here...
bigduckontax is online now

Me and my partner own a property on a buy to let basis in

This answer was rated:

Hi
Me and my partner own a property on a buy to let basis in the uk. We are considering purchasing as an investment 3 purpose build student accommodation studios. We are also considering a 4th purchase of a studio (not purpose built for students) for 71000.Although I understand student accommodation is exempt from stamp duty, does this change because we already own a property.? Do we pay stamp duty on the property which costs us 71000 and do we have to pay further stamp duty on our existing property?Thank you
Lynda

Hello Lynda, I am one of the experts on Just Answer and pleased to be able to help you with your question. Unfortunately, student accommodation is not exempt from Stamp Duty Land Tax (SDLT), a commonly held misconception.

Here is the advice from the British Property Federation:

'The relief operates by using the average value of the units/flats within the property, rather than the gross purchase price, to determine the SDLT rate applicable on a sale. For example, an investor purchases a block of ten flats for £2m. The average value of the flats, £200,000, determines the SDLT rate applicable to the purchase price. Therefore SDLT is payable at 1%, the rate applicable to residential transactions with a value between £125,000 and £250,000, rather than the 4% rate for transactions with a value over £500,000. The SDLT charge is £20,000 (1% of £2m), rather than £80,000 (4% of £2m).

The minimum SDLT rate payable under the relief is 1%, so if the relief is claimed on a sale where the average value of the flats is less than £125,000 (the 1% threshold for residential property), tax at 1% of the aggregate consideration would still be payable.'

The studio would escape SDLT anyway as the consideration is below 125K.

I am so sorry to have to give you such gloomy information.

bigduckontax and other Tax Specialists are ready to help you
Customer: replied 5 months ago.
Thank you. So put simply if I buy 3 student rates which total 180000, I would pay 2% on the amount above 125K?
And what of our existing property which we have owned for several years. Are we liable for an additional stamp duty tax on that?

No, 1%.

SDLT is payable by the buyer not the vendor.

Thank you for your support.